Not Born Yesterday

Before this piece kicks off, I have to declare several interests.

From 1972 until 1974, I devoted a lot of time and effort to persuading branded food manufacturers that multiple grocery retailers were not far removed from gangsters in terms of their grasping and generally blackmailing approach to 'suppliers' - as they rather gratuitously described food producers from Day One.

During this period, for example, I informed the Unilever Food business that in 1973, they had given more money in 'trade discounts' (aka bribes) to the grocery multiple trade than they had to their shareholders. I told them and many other clients during this period that the threat of removing their products from supermarket shelves would result in the collapse of what was nothing more (at the time) than a bullying bluff by grocery multiples.

But between 1975 and 2000 (tired of the brick wall/head routine) I decided to work in turn with Fine Fare and Safeway supermarkets. Neither experience raised multiple grocers in my estimation. Fine Fare's management in particular were bullying, brainless over-promoted buyers who thought their job was to browbeat consumers into buying everything they sold. They were also dishonest and manipulative - but prepared to admit in private (and after a few drinks) that had the manufacturers told them where to get off in the early 1970s, they would have been forced to capitulate.

Safeway were on the whole decent people incapable of understanding that misleading claims were....misleading, as opposed to 'normal business'. In the end, they quite deliberately fattened themselves up to be taken over (at great enrichment to the directors) by Morrisons - and, in time, at great loss to the shareholders of Morrisons.

Finally, since retiring to the West Country eight years ago, I have watched as the influence of supermarkets (especially Tesco) has changed the nature of small country towns - and not for the better. In this process, they are hand-in-glove with local government at County level. Only a major effort by local people and district councils has so far slowed the march.

In short, I see multiple grocers as, on the whole, a pernicious influence in our culture. (In the US, 17,805 websites are devoted to the same belief, where Asda's owner Walmart has ripped the community heart out of the country). Their aim - having reached the zero-sum gamein head-to-head competition with rivals - is to snuff out every form of independent competition at every level. The strategy for achieving this hinges almost entirely on ubiquitous availability.

I wouldn't start from here

Putting together a committee to look objectively at all aspects of competitiveness in the retailing of groceries, the Competition Commission's (CC) choice of members for the Groceries Inquiry doomed this aim to failure from the start. The Chairman of it (and the man who has fronted the report's publication) is Peter Freeman. I imagine he chose himself, because Mr Freeman is also the Chairman of the overall quango.

There is no doubting the Chairman's expertise. He has thirty years of experience in business and competition law. He gained this, however, at the international law firm Simmons & Simmons, a company with offices wherever there is business: twenty of them to be precise, employing over 2000 people. S&S like BIG. They are big, and their clients are very big. They have three specialisms: government, financial and general retail. A whole division of the practice is devoted to advising clients as to the purchase of land for retail construction. The firm also gives lots of merger and acquisition advice: Simmons & Simmons, for example, supported the Barclays legal team in advising the bank on its acquisition of Charles Schwab Europe.

Peter Freeman started work (as an S&S employee) with the quango sector in the 1980s, when the CC's predecessor The Monopolies and Mergers Commission was investigating the brewers. It was therefore unsurprising that when he semi-retired in 2003, the CC offered him the job as Deputy Chairman.

Since joining the commission, he has headed four inquiries into mergers and acquisitions. All of them went through.

Of Freeman's colleagues on the committee of inquiry into grocery retailing, Jayne Almond is a banker who now heads a commercial property business. Previously she was respectively Managing Director of Barclays Home Finance and Lloyds TSB. Barbara Donogue is a banker, specialising in raising capital. She was previously Managing Director of Natwest Markets. Professor Alan Gregory teaches corporate finance at Exeter University. Professor Alan Hamlin is a lawyer,economist and political theorist. And Bruce Lyons is an economics professor specialising in large-scale industry.

So: a lawyer to big business, two commercial big-name retail bankers, and three professors. Clearly, choosing people with direct involvement in UK grocery retail would represent a conflict of interest. But one would surmise from these biographies that there weren't a lot of conflicts on the committee while the enquiry unfolded. One imagines that there was little small-talk about running a small business and trying to afford Council Tax rises. They sound to me like status quo sort of folk, and we're not talking rock bands here.

Peter Freeman is fanatical about competition and unfair trade. In this sense he seems a good egg. Former colleagues talk more in terms of his brilliance, dedication (and ability to command respect) rather than having liked the bloke. But it isn't the job of this analysis to suggest that Freeman is a beastly capitalist who preys on children in his spare time: he is actually a leading expert on naval history, a dedicated family man and scrupulously honest.

Rather, I wish to ask why any independent retailer would expect to get a fair crack of the whip from these five people. They are all, let's face it, senior members of an economic Establishment which sees Global clients and BIG as the inevitable future. I suspect in fact that anyone offering an alternative approach to this group would be subject to the standard polite but deeply-felt belief belief that they must be mad or naive or in a time warp or all three.

This is indeed what the Report (and yes, I have read it) seems to confirm in its findings. Early on, the supermarkets get a generally clean bill of health: they 'work well', it says, with overall 'good outcomes for consumers'. But in two specific areas, 'not all is well' says the document, with a grave frown.

First off, in some towns, the supermarkets don't have enough competition. So we should relax the planning rules about letting in rival supermarkets. More supermarkets! Hurrah!

And second - gentle slap on wrist - on occasion, 'the transfer of excessive risk and unexpected costs to suppliers left them no room for innovation, which was therefore bad for consumers'. Well actually boys and girls, I'd have said it was also pretty bad for their shareholders,workforce and general sustainability - but let's not be picky. The solution, the Committee suggests, is a voluntary code of practice in dealings with suppliers and an Ombudsman to whom screwed suppliers can appeal. No new laws though! Hurrah!

Er....is that it?

Peter Freeman is on the record as distrusting over-regulation, and on the whole I'm right with him on this one. But the recommendation is both bland and naive. (It is, however, far too much for The Slithery Tesco Thing to swallow: they've already fired several torpedoes to try and scupper Freeman's somewhat slow-moving cruiser).

Supermarkets do not on the whole work for the consumer's good. They obfuscate on packaging; they cheat on 'special' offers; they try to give the impression of value, but always make up the margin by loading the price of 'shoulder' items; they're very economical with the truth about Fair Trade and Organic; their fresh produce prices are often much higher than local shops; and every time the media have investigated complaints in these areas, lots of grubby behaviour has come to light. I know this for the obvious reason that I spent two decades working with them.

To suggest therefore that a voluntary code of practice (with Ombuds Man thrown in) is enough to contain the negative influence of the big multiples is risible. Supermarkets always shift all the risk they can onto the supplier - and then calmly take the credit for the resultant price cut. And as Declan Curry pointed out (while interviewing the Committee Chairman on BBC News) no supplier with his head screwed on the correct way is going to spill the beans - otherwise quite soon he wouldn't have a business.

Freeman didn't come across as that cuddly in the interview. Having brusquely told dear Declan that his first question was 'simplistic', he in turn showed little or no compassion for the BBC man's suggestion that local independents were finding it hard to compete.

"Competititon is tough" he shot back (in an alarmingly Thatcheresque tone) "and people have to get used to that." Fine said Deckers, but pretty soon there won't be any independents left.

"Our evidence did not support that" said Freeman, adding - with the lawyer's careful choice of words - "There is nothing to show that independents are in terminal decline". Surely there is, asked Curry.

"Not at all" Freeman replied, "We as a committee are very clear that the signals are mixed on this".

So it's a sort of hazily focused data set then? Shame on Declan for not having the figures to hand: last year, independents' turnover grew by 2%, but their share of market fell (as it does every year) to a whopping 2.5%. I would imagine that if my business fell from 43% to 2.5% market share over thirty or so years, I'd think it just might be in terminal decline, but there you are: 'This sector is dead'. 'No it's not, it's just resting.'